v2.4.0.6
INCOME TAXES
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

13. INCOME TAXES

The provision for income taxes included the following components at December 31, 2013, 2012 and 2011:
 
 
 
 
 
2013
 
2012
 
2011
  
 
(Dollars in thousands)
Current:
 
 
  
 
 
 
  
 
 
 
  
 
Federal
 
$
6,449
 
 
$
6,985
 
 
$
5,483
 
State
 
 
940
 
 
 
928
 
 
 
951
 
Foreign
 
 
1,273
 
 
 
972
 
 
 
2,490
 
Total
 
 
8,662
 
 
 
8,885
 
 
 
8,924
 
Deferred
 
 
1,268
 
 
 
1,648
 
 
 
(343
Total provision
 
$
9,930
 
 
$
10,533
 
 
$
8,581
 
The differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2013, 2012 and 2011:
 
 
 
 
 
2013
 
2012
 
2011
U.S. federal statutory income tax rate
 
 
35.0%
 
 
 
35.0
 
 
35.0
State income taxes, net of federal tax benefit
 
 
2.6
 
 
 
2.3
 
 
 
2.5
 
Non-taxable municipal bond interest
 
 
(1.7)
 
 
 
(1.9
 
 
(2.7
Foreign income tax rate differences
 
 
(0.9)
 
 
 
(2.2
 
 
(1.5
Other
 
 
0.2
 
 
 
0.9
 
 
 
1.0
 
Effective tax rate
 
 
35.2%
 
 
 
34.1
 
 
34.3
The foreign component of pretax net earnings was $4.2 million, $6.2 million and $5.3 million for 2013, 2012 and 2011, respectively. As of December 31, 2013, the total amount of unremitted foreign earnings was $6.2 million. A deferred tax liability has not been recorded on these unremitted earnings because the Company intends to permanently reinvest such earnings outside of the U.S. Future dividends, if any, would be paid only out of current year earnings in the year earned. If the remaining unremitted foreign earnings at December 31, 2013 were to be repatriated in the future, the related deferred tax liability would not have a material impact on the Company’s financial statements.
The components of deferred taxes as of December 31, 2013 and 2012 were as follows:
 
 
 
 
2013
 
2012
  
 
(Dollars in thousands)
Deferred tax benefits:
 
 
  
 
 
 
  
 
Accounts receivable reserves
 
$
440
 
 
$
421
 
Pension liability
 
 
8,691
 
 
 
10,882
 
Accrued liabilities
 
 
2,164
 
 
 
1,934
 
  
 
 
11,295
 
 
 
13,237
 
Deferred tax liabilities:
 
 
  
 
 
 
  
 
Inventory and related reserves
 
 
(2,601)
 
 
 
(1,316
Cash value of life insurance
 
 
(3,240)
 
 
 
(3,029
Property, plant and equipment
 
 
(1,757)
 
 
 
(1,713
Intangible assets
 
 
(5,948)
 
 
 
(5,051
Prepaid and other assets
 
 
(264)
 
 
 
(268
Foreign currency gains on intercompany loans
 
 
(327)
 
 
 
(419
  
 
 
(14,137)
 
 
 
(11,796
Net deferred income tax benefits
 
$
(2,842)
 
 
$
1,441
 
The net deferred tax (liabilities) benefits are classified in the Consolidated Balance Sheets as follows:
 
 
 
 
2013
 
2012
  
 
(Dollars in thousands)
Current deferred income tax (liabilities) benefits
 
$
(849)
 
 
$
649
 
Noncurrent deferred income tax (liabilities) benefits
 
 
(1,993)
 
 
 
792
 
  
 
$
(2,842)
 
 
$
1,441
 

Uncertain Tax Positions

The Company accounts for its uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 provides that the tax effects from an uncertain tax position can be recognized in the Company’s consolidated financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position.
The following table summarizes the activity related to the Company’s unrecognized tax benefits:
 
 
(Dollars in thousands)
 
Balance at December 31, 2010
 
$
84
 
Expiration of the statute of limitations for the assessment of taxes
 
 
(84
Balance at December 31, 2011
 
$
 
Increases related to current year tax positions
 
 
124
 
Balance at December 31, 2012
 
$
124
 
Increases related to current year tax positions
 
 
 
Balance at December 31, 2013
 
$
124
 
The Company had unrecognized tax benefits of $124,000 at December 31, 2013. This amount, if recognized, would reduce the Company’s annual effective tax rate. Included in the Consolidated Balance Sheets at December 31, 2013 was a liability for potential interest related to these positions of $5,000. The Company had unrecognized tax benefits of $124,000 at December 31, 2012. This amount, if recognized, would reduce the Company’s annual effective tax rate. Included in the Consolidated Balance Sheets at December 31, 2012 was a liability for potential interest related to these positions of $2,000. The Company had no unrecognized tax benefits as of December 31, 2011.
The Company files a U.S. federal income tax return, various U.S. state income tax returns and several foreign returns. In general, the 2009 through 2013 tax years remain subject to examination by those taxing authorities.